HSBC Bank Malta has reported a 'modest' drop in pre-tax profit for the period July 1 to November 19.
In a regular company statement to the stock exchange the bank said the decline was primarily attributable to higher costs and a lower contribution from the life insurance business.
Revenue for the period was higher than in the prior period as a result of higher net interest and fee income. Net interest income was impacted by the prevailing eurozone interest rate environment - decreasing margins on loans and investments were offset by lower interest expense driven by customers’ continued preference for shorter-dated deposits as well as the reduction in deposit rates.
Operating expenses for the period were higher than for the same period in 2014, primarily due to continued investment in compliance, increases in regulatory costs, and the impact of currency changes on the cost of HSBC Group services.
Excluding these items, expenses remained well controlled and in line with the same period in 2014.
The bank said that given the challenging market and operating environment, it would be focusing on improving its productivity and cost effectiveness to ensure a better service to customers by continuing to streamline its operations while investing in areas of growth and in compliance.
LOMBARD BANK ALSO REPORTS HIGHER COSTS
Lombard Bank Malta in another announcement said it continued to experience
pressure on its after-tax profits during the first three quarters of 2015. Core business remained healthy with some areas showing noticeable improvement.
Impairment allowances were increased to provide for lending situations that by the nature of the underlying business require extended time to mature.
Customer deposits were at a lower cost even though volumes increased while the lending portfolio remained lower than it was at the start of the year following loan repayments. This, together with at times negative money market rates, gave rise to lower Interest Income and consequently reduced Net Interest Income.
Fee and Commission Income maintained an upward trend as the bank continued to grow its transaction-based business.
"Compliance and regulatory expenses remained a significant component of the increase in Other Operating Costs as the volume and complexity of additional regulatory requirements comes into force. Higher investment in potential new lines of business and human resources also contributed," Lombard said.